Monday, June 25, 2018

'Housing for People' vs 'People Housing'

I’ve been in the housing business for almost 4 decades, first as a Realtor, then as a General Contractor building homes and lastly as a sales rep for some of the largest modular housing factories in the Eastern US. Now I observe and write about the modular and prefab housing industry.

And what I’ve observed is a huge change in what our industry is building.

If we are talking ‘Housing for People’ we usually think of a single family modular residence that can be built as either a standard floorplan offered by the factory or as a completely custom designed home. Custom modular homes are the lifeblood of the modular home factories serving the Mid-Atlantic and New England states.

However if you move into the South and Midwest regions custom designs gives way to standardized factory plans for the most part. Many of the factories in these regions also build HUD homes with the floor plans liberally shared between HUD and IRC code homes.

Moving into the Southwest the biggest prefab house type is the ranch style HUD home. There are a ton of HUD mostly factories residing there.

This has lead to more “People Housing” in many states, especially the ones in on the West Coast. Trying to understand the prefab industry there is a never ending adventure into new ideas, new ventures and young tech people with lots of investor funding all trying to produce the “The Next Best Thing.”

The biggest change over the past 5 years is the move of developers and investors to prefab and modular construction as a better way to build condos, apartment buildings, hotels, affordable housing and homeless shelters.

Throw out individual custom design and replace it with a floorplan that can be replicated over and over, stacked higher and higher all the while cutting down on labor, which is becoming scarce, and replacing it with automation.

New modular factories have begun springing up to serve this highrise mania needed to satisfy cities’ needs for ‘people housing’. This is the only alternative where affordable single family housing is non-existent. “Stack ‘em up and stuff ‘em in.”

“People Housing” Factories:

Katerra is a technology-driven offsite construction company. It was founded in 2015 by Michael Marks, former CEO of Flextronics and former Tesla interim CEO, along with Fritz Wolff, the executive chairman of The Wolff Co. It has raised $1.1 billion in venture capital investments and has more than $1 billion in project backlog.

Factory OS is located in the former Blu Homes 250,000-square-foot factory at Mare Island in Vallejos, CA. Factory OS founder and developer Rick Holliday is going to build and truck modules to spots like San Francisco and Oakland, where it's more expensive to build affordable housing.

FullStack Modular is a design-build contractor providing modular residential buildings in densely populated urban areas, with a focus on multi-family rentals, student housing, and hotels.

Blokable’s founder, Aaron Holm, former Amazon product manager and burgeoning entrepreneur, wanted to transform the housing market by scaling up manufactured housing all along the West Coast. However they recently announced they are ditching that model and going into the People Housing business.

“Housing for People” Factories:

The old guard modular home factories East of the Mississippi all fit this category. Using a network of home builders and dealers they offer semi to full custom single family modular homes to house people.

The disappointing side of the “Housing for People” market is very few new new modular or prefab factories are being built.

There are a couple of factories that have popped up recently that seem to want address the Single Family market and provide some innovation to the old guard prefab industry.

Kasita located in Austin, Texas provides stackable, minimalist prefab homes. Kasita homes can be assembled offsite and shipped in only a couple of weeks, and offer various smart home integrations.

Entekra is a California company that has brought innovation to panelized custom homes through a system called FIOSS. Their automated panel, roof and floor system is said to reduce on-site framing labor to almost nothing.

Module, based in Pittsburgh, PA, is using an innovative ‘add on’ modular system that allows homeowners to add additional modules as their lifestyles change.

What is really missing from all of this a real “Disruption” to the prefab and modular industries. Even the most modern and innovative factories being opened around the country are not disruptive.

Disruptive is Amazon and Uber changing the way we buy and ride. Will we ever see that in offsite housing?


Anonymous said...

Coach, different situations call for different measures. You are lucky to live a more rural area than me. I have to live in a “Stack ‘em up and stuff ‘em in” dwelling simply because there is no place to put a house I can afford in my area of Portland. I wish there was.

Bill Hart said...

Coach, I suspected your business background..up to now at least..had to be quite similar to mine and visa you've confirmed it..except that I started even earlier, in very late 50s! So its probably no wonder you and I seem to be rather seamless on most issues, and thus on most industry fixes..others will.. just.. have to wonder why..til then keep on explaining the facts of life! Go get'em Coach!